Drivers Enlist In Gas War

New Station Fires Lower Shots In Nn

December 28, 1990|By NEIL CORNISH Staff Writer

The battle for your gasoline dollar is heating up in the form of a small-scale price war among a handful of Peninsula gas stations.

However, industry members say the price battle will be short-lived, because stations operating on low margins the past four months cannot afford to continue selling gasoline at prices that are actually at or below what it costs them wholesale.

One of the leading warriors in the gasoline skirmish in recent weeks has been East Coast Oil Co. of Richmond, which recently opened a new station at 11702 Jefferson Ave. near J. Clyde Morris Boulevard in Newport News. East Coast decided to promote the store by selling gas several cents cheaper than the competitors, taking advantage of recent price drops in crude oil on the spot market.

"I think we started a trend down here and all the other stations are trying to follow suit," said Lonnie Baldwin, manager of the East Coast station in Newport News.

The station opened about one month ago to long lines of customers waiting to take advantage of its low prices. Currently, the station sells regular unleaded gasoline at $1.099 a gallon, 15 cents below the average in the Daily Press' survey of Peninsula dealers.

East Coast's price cutting has drawn a response from competitors. At nearby Deer Park Exxon, owner John Turlington responded when East Coast undercut his station's prices. He's lowered his prices to $1.119 for a gallon of regular unleaded.

Turlington said the price battles cannot last long, noting dealers operated on lower profit margins during the recent oil price hikes that followed the Iraqi invasion of Kuwait.

Emmitt Short, owner of Bayberry Shell on J. Clyde Morris Boulevard in Newport News, said his station is beginning to feel the pinch of the price competition, which has it selling regular unleaded at $1.219 a gallon.

"There's a little bit of a gas war going on," Short said. "Of course it's hurting us, but I can't compete with it."

Jeffrey Miller, president of the Eastern Virginia Petroleum Marketers Association, said the drop in oil prices in the past few weeks has lessened the pressure on retailers, as gasoline stations are known in the trade. The lower wholesale prices allow retailers to be more flexible and competitive with their prices, he said.

The seasonal drop in demand for gas has also lowered prices, Miller said. "A lot of the politics have been taken out of the marketplace," he said. Currently, it's a "supply and demand marketplace with Jan. 15 looming overhead," he added, referring to President Bush's deadline for Iraq to pull out of Kuwait.

Wholesale regular unleaded prices currently range from $1.06 to $1.15 a gallon, Miller said. The Daily Press's survey of nine area stations showed the average price of regular unleaded on the Peninsula was $1.24 a gallon, down 1 cent from Friday.

Midgrade gasoline costs an average of $1.36 a gallon, according to the survey, while premium unleaded cost $1.45. Each was a 1-cent decrease from the previous week. But mid-grade was selling for $1.179 a gallon at East Coast Thursday, and at several other competing stations.

Nationwide, gas prices have dropped nearly 9 cents since the week before Christmas, according to the American Automobile Association.

Self-serve unleaded cost $1.282 a gallon this week, according to the AAA survey, 8.9 cents lower than the price on Dec. 18, and the lowest since a gallon cost $1.273 on Sept. 5.

The average price for self-serve regular gas was $1.287, down 7.4 cents. AAA said prices also fell this week for higher grades of gasoline.

The average price for a gallon of mid-grade unleaded was $1.368, down 9.8 cents from Dec. 18. The average price for a gallon of self-serve premium was $1.45, down 8 cents.